Luxury Segment Holds Its Own

DETROIT — Although overall U.S. light vehicle sales have declined 4.9% through the first eight months of the year, sales in the luxury car segment have held up pretty firmly. Yes, the overall luxury segment has seen sales decline 7.8% overall through August, but the results aren't as dismal as those reported in some sport/utility vehicle and van segments of the business.

Recent declines in the stock market, rising unemployment, jittery consumer confidence levels and recent terrorist attacks are, however, placing negative pressure on the entire economy, which could drag U.S. luxury vehicle sales even lower before the end of the year.

Even with the uncertainty, all automakers are preparing to move new metal into the luxury car segment. Chief among them: Cadillac, which is trying to reshape its image on the world stage. Cadillac will introduce its new 2003 CTS (see sidebar) in North America early next year, with sales launching in Europe before year's end. The CTS is Cadillac's first passenger car to adopt the company's new “art & science” design theme that will be a feature on all future Cadillacs.

BMW AG also will launch its new flagship 745i sedan early in 2002. This new 7-series replaces an already highly respected luxury sedan that has been on the market for nine years (see sidebar). The new 7-series takes BMW's traditional styling cues to the next level and features breakthrough powertrain technologies.

Among the current luxury car pack, Mercedes-Benz's C-Class seems to be making significant gains against some aging competitors. C-Class sales have risen 46.6% in the first eight months of the year compared with a year ago. Volvo also is racking up significant gains in the segment thanks to its S60 and S80 models, which combined have posted an 83.2% sales gain versus a year ago.

On the losing end is DaimlerChrysler AG's Chrysler brand, which has seen sales of its 300M and LHS luxury cars decline 32.8% and 49.6%, respectively, since the beginning of the year. Chrysler plans to spruce up its 300M with a new Special model that receives significant cosmetic and powertrain changes, including a 3.5L SOHC V-6 that pumps out 255 hp. On the exterior, the 300M Special features unique ground effects and 18-in. wheels fitted with Michelin Pilot sport tires.

Cadillac, BMW prepare to pounce on market

Trying to avoid the fate of its sister division, Oldsmobile, Cadillac is revamping its product lineup and brand image to attract younger, import-oriented buyers. The first attempt at turning its new design direction into reality debuted earlier this year with the Escalade fullsize sport/utility vehicle. Now Cadillac is turning its attention to passenger cars with the new 2003 CTS, which replaces the lackluster Catera.

Cadillac wants the CTS to send shockwaves through the luxury segment in a bold way via its exterior and interior styling. “CTS will turn heads in a segment that typically refines, rather than defines, automotive styling,” says Cadillac General Manager Mark LaNeve.

The CTS will be powered by a 3.2L, 220-hp V-6 mated to either a 5-speed automatic or manual transmission. Cadillac benchmarked the ride and handling of the CTS against the BMWs of the world by conducting extensive ride and handling testing at the famed Nurburgring track in Germany.

Cadillac expects the CTS to more than double the sales volume of the Catera, which has sold 8,230 units through August. Cadillac's Mr. LaNeve expects the CTS to reach sales of 30,000 units annually, with a good majority of the buyers being those who are moving out of midsize sedans and into the luxury segment.

BMW will introduce its new 7-series sedan early in the year, its first refresh in close to a decade. The 7-series will feature a 4.4L, 333-hp all-aluminum V-8 engine mated to the industry's first production 6-speed automatic transmission. The 2002 7-series features a new telematics system called “iDrive,” which moves all navigation system, cell phone, entertainment system and climate control operations to a single control on the console. The new 7-series will also feature an upgraded all-aluminum suspension that follows in the prized lineage of past 7-series sedans.
— Kevin Kelly